Pharmaceuticals and Medical Equipment in The USA: Euromonitor International October 2020

Pharmaceuticals and Medical
Equipment in the USA

Euromonitor International
October 2020
PHARMACEUTICALS AND MEDICAL EQUIPMENT IN THE USA Passport i
LIST OF CONTENTS AND TABLES

Headlines ..................................................................................................................................... 1
2. 1
The pandemic exposes the vulnerability of the US pharmaceuticals industry .......................... 1
Drug pricing remains one of the major concerns for the government ....................................... 1
Medical equipment to benefit from higher demand from older Americans ................................ 2
Competitive Landscape ................................................................................................................ 2
Megamergers dominate pharma headlines .............................................................................. 2
Upjohn and Mylan venture creates A billion generating generics giant..................................... 2
Industry Overview ......................................................................................................................... 3
Chart 1 Turnover 2004-2024, LCU million................................................................. 3
Chart 2 Value Added 2014-2019, LCU million .......................................................... 3
Chart 3 Profit and Profit Margin 2014-2019............................................................... 4
Chart 4 Turnover and Growth by Category 2019, LCU million .................................. 4
Chart 5 Pharmaceuticals Turnover 2004-2024, LCU million ..................................... 4
Chart 6 Medical And Surgical Equipment Turnover 2004-2024, LCU million ............ 5
Chart 7 Absolute Growth by Category, LCU million .................................................. 5
Cost Structure .............................................................................................................................. 6
Chart 8 Cost Structure 2019, LCU million ................................................................. 6
Chart 9 B2B Costs and Growth 2019, LCU million .................................................... 6
Trade ............................................................................................................................................ 7
Chart 10 Imports, Exports and Trade Balance 2014-2019, LCU million...................... 7
Chart 11 Exports 2014-2019, LCU million ................................................................... 8
Chart 12 Exports Share by Category 2014-2019, % of Total Exports ......................... 8
Chart 13 Exports by Country 2014-2019, LCU million ................................................ 9
Chart 14 Exports Share by Country 2014-2019, % of Total Exports ........................... 9
Chart 15 Imports 2014-2019, LCU million ................................................................. 10
Chart 16 Imports Share by Category 2014-2019, % of Total Imports ....................... 10
Chart 17 Imports by Country 2014-2019, LCU million............................................... 11
Chart 18 Imports Share by Country 2014-2019, % of Total Imports ......................... 11
Market Structure ......................................................................................................................... 12
Chart 19 Market Structure by Category 2014-2019, LCU million .............................. 12
Chart 20 Market Share by Category 2014-2019, % of Total Market ......................... 12
Chart 21 Market Structure 2014-2019, LCU million .................................................. 13
Buyers ........................................................................................................................................ 13
Chart 22 Market Structure by Buyer 2019, LCU million ............................................ 13
Chart 23 B2B Buyers and Growth 2019, LCU million ................................................ 14
Firmographics............................................................................................................................. 15
Chart 24 Employment Statistics and Productivity 2014-2019.................................... 15
Chart 25 Number of Companies by Company's Size 2014-2019 .............................. 15
Chart 26 Firmographics Distribution by Company Size 2014-2019, % of Total
Companies ................................................................................................. 15
Chart 27 Firmographics Distribution by Turnover 2014-2019, % of total
Turnover ..................................................................................................... 16
Chart 28 Industry Concentration 2014-2019, % Share of Turnover .......................... 16
Chart 29 Top Companies' Shares 2019, % of Turnover............................................ 17
© Euromonitor International
PHARMACEUTICALS AND MEDICAL EQUIPMENT IN THE USA Passport ii
Chart 30 Top 5 Companies' Share Dynamics 2014-2019, % of Turnover................. 17

Chart 31 Turnover Performance by Company 2014-2019 ........................................ 18
Digital Business .......................................................................................................................... 18
Chart 32 Share of E-Commerce Activities 2019-2024, % ......................................... 18
Chart 33 Number of Companies Receiving Orders Online 2014-2019 ..................... 19
Chart 34 Number of Companies Placing Orders Online 2014-2019 ......................... 19
Chart 35 Revenue from E-Commerce, 2014-2019, LCU million ............................... 20
Industry Context ......................................................................................................................... 20
Chart 36 Attractiveness Index in Selected Industries 2019 ....................................... 20
Chart 37 Industry vs GDP Performance 2004-2024, % y-o-y Growth ....................... 21
Chart 38 Pharmaceuticals and medical equipment vs Other Industries 2004-
2024, LCU million ....................................................................................... 21
Chart 39 Industry Turnover by Region 2019, USD million ........................................ 22
Chart 40 Pharmaceuticals and Medical Equipment in North America 2004-
2024, USD million ...................................................................................... 22
PHARMACEUTICALS AND MEDICAL EQUIPMENT IN THE USA Passport 1
PHARMACEUTICALS AND MEDICAL

EQUIPMENT IN THE USA
HEADLINES
▪ Producers’ revenue growth slows to 5% in 2019, and is predicted to slow further to a CAGR of
4% over 2019-2024, due to the devastating effect of COVID-19 on the supply of major
ingredients
▪ Heightened concern over the security of supply chains and consequent reshoring initiatives
are projected to have a positive effect on US production of medicinal products in the long term
▪ Rising prices of pharmaceuticals are set to remain a major concern for government and
households, but curbing price growth will have a negative impact on manufacturers’ profit
margins
▪ US companies’ efforts to curb growth in costs and expand their product portfolios result in
three megadeals worth hundreds of billions of dollars
2.
The pandemic exposes the vulnerability of the US pharmaceuticals

industry
Growth in the pharmaceuticals and medical equipment industry in the US slowed in 2019, and
is predicted to remain stagnant over 2020, as the pandemic exposes the vulnerabilities of
producing overseas. Over the last decade, China’s share of active pharmaceutical ingredients
(APIs) and formulations used in the production of common medicines, like antibiotics, in the US
has grown considerably, making the US vulnerable to supply chain fluctuations. COVID-19
revealed such vulnerabilities, disrupting the supply of numerous drugs, jeopardising the delivery
of drugs to patients who desperately need them, and causing major pharmaceutical companies
to consider establishing API production facilities closer to home, even if it involves higher costs.
The US administration encouraged onshoring production through the Protecting Our
Pharmaceutical Supply Chain from China Act of 2020, according to which purchases from China
should stop by 2023. The US administration is also considering banning imports of APIs and
formulations from China, forcing the industry and consumers to rely on US-produced
pharmaceuticals. Implementing this agenda would boost domestic production, but only in the
long term. According to industry players, reshoring is not feasible in the short to medium term
and might take not only decades but also billions of dollars in investment. Nevertheless, the
government has already awarded a USD354 million 4-year contract to a new company, Phlow,
producing APIs and generics. The contract could be extended by six years and USD812 million,
making it one of the largest in the country’s history.
Drug pricing remains one of the major concerns for the government
Facilitated by renewed demand for medical procedures, heightened health awareness and
reshoring initiatives, pharmaceuticals and medical devices industry growth is projected to pick
up from 2021. Numerous elective and non-urgent medical procedures, including cardiac
procedures, joint replacements and cataract procedures, were postponed in 2020 due to
concerns regarding the safety of patients, shortages of staff and low supply of protective
equipment during the pandemic. Services provision is set to be renewed in 2021, when the
pandemic recedes, resulting in a rise in demand for pharmaceuticals and medical equipment.
However, producers might face tougher market conditions as the government proceeds with its
agenda to curb growing prices for prescription drugs.
Out-of-pocket costs for medicines have been growing significantly in the US over the past
decade, making healthcare less affordable for many Americans. The COVID-19 health crisis
and surging unemployment are set to exacerbate the issue. Legislation is being considered to
curb price growth. In late 2019, the House of Representatives passed the Lower Drug Costs
Now Act. Also, the government is considering passing a bill to reduce prescription drug costs.
The bill would cap the growth of drug prices and impose a limit on out-of-pocket payments for
the most vulnerable groups in society – older people and citizens with disabilities. The plan is
predicted to provide USD100 billion in savings, according to the Congressional Budget Office.
On the other hand, controlling drug prices is set to lead to slimmer margins for producers and a
resulting decrease in R&D efforts.
Medical equipment to benefit from higher demand from older Americans

Growth in the medical equipment industry slowed slightly in 2019, but is predicted to pick up
in 2021 after the health crisis recedes. Regulatory changes that took full effect in 2019 have
negatively impacted growth opportunities, but the industry still has potential in the ability to
produce smart, well-connected and easy to use cost-effective medical devices suited for older
consumers. The population aged 65+ increased in 2019 and is set to grow further over 2019-
2024, to represent nearly one fifth of the total population by the end of the period. Chronic
diseases and acute conditions have been rising in parallel with the ageing of the population over
the years, creating greater demand for pharmaceuticals and medical devices. In addition, due to
the growing scale of outpatient care services, significant potential lies in the manufacturing of
equipment for minimally invasive surgery, injectable devices, effective emergency care kits and
mobile surgery centres, among other equipment.
COMPETITIVE LANDSCAPE
Megamergers dominate pharma headlines

M&A activity intensified in 2019, with some of the largest deals in the history of the
pharmaceuticals industry. Bristol-Myers Squibb’s purchase of Celgene, valued at USD74 billion,
was the largest deal of the year, supplying the company with eight products with more than
USD1 billion in annual revenues in the areas of oncology, immunology and cardiovascular
diseases. With more than USD20 billion in potential revenues and an additional USD2.5 billion
in cost synergies, as well as a strong existing and potential pipeline, Bristol-Myers became a
leading biopharma company in the country through this purchase.
AbbVie’s acquisition of Allergan, worth USD63 billion, was another notable deal. AbbVie’s top
selling drug Humira will face fierce competition from biosimilars and thus a significant loss of
revenues as of 2023, and acquiring Allergan brought a lucrative pipeline in immunology,
hematologic oncology, medical aesthetics, neuroscience, women’s health, eye care and virology
pharmaceuticals, securing the company’s revenue flow for the future.
Upjohn and Mylan venture creates A billion generating generics giant

2019 was also fruitful in terms of partnership formations in the pharmaceuticals and medical
equipment industry. For example, Mylan and Upjohn – Pfizer’s generics and off-patent branch –
entered into an agreement to form a venture, Viatris, worth USD19 billion in future revenues.
The new company will have significant exposure in China and emerging markets coming from
Upjohn’s side of the business and a leading sales position in developed European and US
markets from Mylan’s side, as well as a broad portfolio and a substantial future pipeline of
lucrative treatments. Numerous similar deals are expected to follow as the global economy
enters a slowdown and companies seek to strengthen their portfolios, control costs and increase
margins.
INDUSTRY OVERVIEW
Chart 1 Turnover 2004-2024, LCU million
Source: Euromonitor International from official statistics, trade associations, trade press, company research.
Chart 2 Value Added 2014-2019, LCU million
Chart 3 Profit and Profit Margin 2014-2019
Chart 4 Turnover and Growth by Category 2019, LCU million
Chart 5 Pharmaceuticals Turnover 2004-2024, LCU million
Chart 6 Medical And Surgical Equipment Turnover 2004-2024, LCU million
Chart 7 Absolute Growth by Category, LCU million
COST STRUCTURE
Chart 8 Cost Structure 2019, LCU million
Chart 9 B2B Costs and Growth 2019, LCU million
TRADE
Chart 10 Imports, Exports and Trade Balance 2014-2019, LCU million
Chart 11 Exports 2014-2019, LCU million
Chart 12 Exports Share by Category 2014-2019, % of Total Exports
Chart 13 Exports by Country 2014-2019, LCU million
Chart 14 Exports Share by Country 2014-2019, % of Total Exports
Chart 15 Imports 2014-2019, LCU million
Chart 16 Imports Share by Category 2014-2019, % of Total Imports
Chart 17 Imports by Country 2014-2019, LCU million
Chart 18 Imports Share by Country 2014-2019, % of Total Imports
MARKET STRUCTURE
Chart 19 Market Structure by Category 2014-2019, LCU million
Chart 20 Market Share by Category 2014-2019, % of Total Market
Chart 21 Market Structure 2014-2019, LCU million
BUYERS
Chart 22 Market Structure by Buyer 2019, LCU million
Chart 23 B2B Buyers and Growth 2019, LCU million
FIRMOGRAPHICS
Chart 24 Employment Statistics and Productivity 2014-2019
Chart 25 Number of Companies by Company's Size 2014-2019
Chart 26 Firmographics Distribution by Company Size 2014-2019, % of Total Companies
Chart 27 Firmographics Distribution by Turnover 2014-2019, % of total Turnover
Chart 28 Industry Concentration 2014-2019, % Share of Turnover
Chart 29 Top Companies' Shares 2019, % of Turnover
Chart 30 Top 5 Companies' Share Dynamics 2014-2019, % of Turnover
Chart 31 Turnover Performance by Company 2014-2019
DIGITAL BUSINESS
Chart 32 Share of E-Commerce Activities 2019-2024, %
Chart 33 Number of Companies Receiving Orders Online 2014-2019
Chart 34 Number of Companies Placing Orders Online 2014-2019
Chart 35 Revenue from E-Commerce, 2014-2019, LCU million
INDUSTRY CONTEXT
Chart 36 Attractiveness Index in Selected Industries 2019
Note: Attractiveness index (IA) is derivative variable, which shows how selected industry performs in
comparison with other industries in an economy. IA is based on a set of variables. For each variable all
industries in the economy are ranked and get corresponding rate from 1 at the very bottom to 177 at the
very top. When all ranks are available weighted average is calculated and corresponding percentile is
assigned. The higher IA the better industry performance is.
Chart 37 Industry vs GDP Performance 2004-2024, % y-o-y Growth
Chart 38 Pharmaceuticals and medical equipment vs Other Industries 2004-2024, LCU

million
Chart 39 Industry Turnover by Region 2019, USD million
Chart 40 Pharmaceuticals and Medical Equipment in North America 2004-2024, USD

million

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Pharmaceuticals and Medical

Equipment in the USA

LIST OF CONTENTS AND TABLES

Chart 30 Top 5 Companies' Share Dynamics 2014-2019, % of Turnover................. 17

PHARMACEUTICALS AND MEDICAL

The pandemic exposes the vulnerability of the US pharmaceuticals

Medical equipment to benefit from higher demand from older Americans

Megamergers dominate pharma headlines

Upjohn and Mylan venture creates A billion generating generics giant

Chart 2 Value Added 2014-2019, LCU million

Chart 3 Profit and Profit Margin 2014-2019

Chart 4 Turnover and Growth by Category 2019, LCU million

Chart 5 Pharmaceuticals Turnover 2004-2024, LCU million

Chart 6 Medical And Surgical Equipment Turnover 2004-2024, LCU million

Chart 7 Absolute Growth by Category, LCU million

Chart 9 B2B Costs and Growth 2019, LCU million

Chart 11 Exports 2014-2019, LCU million

Chart 12 Exports Share by Category 2014-2019, % of Total Exports

Chart 13 Exports by Country 2014-2019, LCU million

Chart 14 Exports Share by Country 2014-2019, % of Total Exports

Chart 15 Imports 2014-2019, LCU million

Chart 16 Imports Share by Category 2014-2019, % of Total Imports

Chart 17 Imports by Country 2014-2019, LCU million

Chart 18 Imports Share by Country 2014-2019, % of Total Imports

Chart 20 Market Share by Category 2014-2019, % of Total Market

Chart 21 Market Structure 2014-2019, LCU million

Chart 23 B2B Buyers and Growth 2019, LCU million

Chart 25 Number of Companies by Company's Size 2014-2019

Chart 26 Firmographics Distribution by Company Size 2014-2019, % of Total Companies

Chart 27 Firmographics Distribution by Turnover 2014-2019, % of total Turnover

Chart 28 Industry Concentration 2014-2019, % Share of Turnover

Chart 29 Top Companies' Shares 2019, % of Turnover

Chart 30 Top 5 Companies' Share Dynamics 2014-2019, % of Turnover

Chart 31 Turnover Performance by Company 2014-2019

Chart 33 Number of Companies Receiving Orders Online 2014-2019

Chart 34 Number of Companies Placing Orders Online 2014-2019

Chart 35 Revenue from E-Commerce, 2014-2019, LCU million

Chart 37 Industry vs GDP Performance 2004-2024, % y-o-y Growth

Chart 38 Pharmaceuticals and medical equipment vs Other Industries 2004-2024, LCU

Chart 39 Industry Turnover by Region 2019, USD million

Chart 40 Pharmaceuticals and Medical Equipment in North America 2004-2024, USD

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